VACC developed MTC to try and provide a mechanism for its supplier members to reduce their exposure to unsecured debtors and improve the fundamentals of their business, particularly cash flow. Though it started as an initiative for VACC members, early in its development VACC decided to make the benefits of MTC available to the industry at large and on a national basis. The system has been growing and running successfully since July 2008.
MotorTradeCard Pty Ltd, which owns and operates the system, is 100% owned by VACC, and it views MTC as a product for the industry, by the industry.
Introduction to MotorTradeCard
The MTC System
MTC is essentially a Business to Business receivables management program, with a rewards component, operating on an integrated multi buyer/multi supplier electronic platform. MTC provides a mechanism whereby suppliers can convert to MTC, their existing in house account customers, or any new ones, which they currently have to fund and manage themselves. It is, in its simplest form, a variation of factoring, but designed along similar principles to a credit card system, though there is no actual card required.
The system is totally electronic and requires both suppliers and buyers to be connected to the internet. Suppliers also need to be able to upload their MTC transactions daily to the MTC platform electronically, via an electronic interface system.
Suppliers need to be approved by MTC before they can participate. For all purchases made through the MTC system, (by approved MTC buyers), the MTC supplier is paid the full value of the invoice, less a receivables management fee (RMF), within 48hours, via direct credit, and the debt then passes to MTC. The RMF varies depending on whether the supplier is offering 30 days or 60 days credit to the buyer, and the level of rewards the supplier wishes to offer. From a suppliers perspective, the major benefits are improved cash flow, zero bad debt risk and reduced debtor administration.
Buyers also need to be approved by MTC. They are required to pass an independent credit and company check, before being approved. The buyer receives either 30 days credit or 60 days credit, depending on the suppliers’ terms. Buyers receive reward points for their purchases through MTC. The default value is currently 0.7% of the invoice value, ($7 for every $1,000 of purchases), though this can be varied up or down, at the suppliers discretion. There is no minimum spend requirements, and buyers receive a consolidated monthly statement for all purchases made using their MTC account, Payment for their purchases at the appropriate month end, depending on the terms offered, are made by direct debit. This is the only payment method available